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Westpac to exit financial advice business
WESTPAC Banking Corp said on Tuesday that it would exit its financial advice business, the last of Australia's top four banks to do so, as regulators increase pressure on the scandal-ridden financial sector to act in their customers' best interests.
Australia's second-largest bank said it would sell the business to Viridian Advisory and merge the remaining of its BT Financial Group units - private banking, investment platforms and retirement funds - into its consumer and business divisions.
It did not provide a deal value for the sale, but said it would take a restructuring charge of up to A$300 million (S$287.6 million) that would be partially offset by the proceeds and A$20 million in productivity savings by 2020.
"Rising costs and lower fees had meant that the advice business has been unprofitable for some time, and we see how much downside risk there is in terms of remediation and fines when we get it wrong," chief executive officer Brian Hartzer told analysts in Sydney. "We're realigning our capabilities into the lines of business where it makes most sense based on customer needs."
Westpac's exit from personal financial advice follows a year-long public inquiry into financial sector greed and wrongdoing which has put pressure on banks and wealth managers to fix serious problems with compliance, governance, ethics and accountability.
Among other reforms, the inquiry called for banks to cut high fees paid to financial advisers to sell products such as life insurance regardless of whether they were in the best interests of clients.
A number of Westpac's salaried financial advisers and support staff would transition to Viridian and about 10,000 customers would be offered an option to move, Mr Hartzer said. About 900 people would be made redundant. REUTERS